Quick loans ruin Spanish dreams

QUICK loans, which seem to many in Spain as the perfect solution to their financial problems when looking to make ends meet, are leading unsuspecting families to lose their homes and dreams.
A legal loophole loan sharks have discovered to get round laws to protect consumers is becoming more common, with lenders declaring they are lending money on a personal basis, as a friend or business partner might do, while forcing customers to sign agreements to pay back impossible amounts in interest.
Once they become unable to keep up with repayments, they are forced to sign for more loans for amounts as much as four times higher than the original amount to keep up, and property put down as a guarantee ends up being lost as they are unable to meet payments.
One such victim is 22-year-old Ernesto Soriano from Madrid. What started out as a stroke of good luck when he was offered a flat with a 40 per cent discount in 2007 has ended up becoming a nightmare situation.
When banks turned him down for the €19,000 he needed to provide as a down payment, Ernesto’s 72-year-old grandmother saw an advert for small loans to be paid back in modest instalments and offered to provide the deeds to her home as collateral.
Although they were given an envelope with the cash in and signed for the loan before a public notary, they did not realise they were actually agreeing to a loan of €37,000 with a 30 per cent annual penalty for delays and made the mistake of not having the contract checked over by an independent lawyer.
When the crisis hit and they became unable to keep up with payments. Soriano explained that a representative from the loan company arrived on their doorstep with a bank employee and told him to sign a loan for €85,000 or risk losing their home.
“I have to pay €261 per month until 2060. I was given €19,000, but am paying off a loan for €85,000 I’ve never seen. Among other things, paying it back means I can’t have children because I wouldn’t be able to afford to bring them up,” Soriano explained.
His is just one of hundreds of cases, while loan companies continue lending cash which leads unsuspecting home-owners to lose the roof over their heads, sometimes over as little as €10,000.
As law firms fight for a change in rules to put an end to the problem, customers are advised to study independent lenders carefully and have contracts checked over by a lawyer before signing.

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